The 2022 Chargeback Field Report

Introduction: Methods and Limitations

The 2022 Chargeback Field Report was written to offer retailers, FIs, and other stakeholders a look at the current state of chargebacks. A cooperative effort by Chargebacks911® and Card Not Present®, this study provides a snapshot of current fraud trends, highlighting key pain points for retailers in general and eCommerce merchants in particular.

Our goal was to assess chargebacks from the merchant’s perspective. This report is based on a survey that included respondents from businesses of all sizes, primarily within the card-not-present (CNP) payments space. We went to great lengths to keep the sample set as random and representative as possible.

The survey group included participants representing multiple industries, scales, and chargeback risk levels. While focused on card-not-present retailers, the survey was designed to be as diversified as possible to generate the most accurate information.

That said, this is by no means a comprehensive report: the survey was voluntary, which limited the sample group. This approach offered significant advantages, but presented certain drawbacks as well. For example, a survey-based report necessarily relies on selfreported data. The person completing the survey would often have limited access to some of the data we asked for, or be unfamiliar with subjects such as reason codes.

And despite our preventative efforts, some bias will still exist herein. Certain participants will undoubtedly be more forthcoming and more proactive towards chargebacks. Put another way, merchants willing to fill out a survey are likely to be more familiar with their chargeback stats, and thus provide more accurate details.

Additionally, merchants were asked for approximate numbers if they did not have specific data available when they took the survey. In our experience, merchants commonly underestimate the size of their chargeback problem or overestimate the effectiveness of their management efforts.

Finally, not every participant answered every question, and we’ve rounded all percentages to a whole number for clarity and ease of use. These two factors may result in some totals being more or less than exactly 100 percent.

Key Takeaways

Approximately two-thirds of merchants reported a rise in friendly fraud over the past 3 years, with the average increase being 28 percent. This represents a startling increase in friendly fraud levels, particularly post-COVID.

The majority of respondents said they represent at least some chargebacks; nearly half of those who do, however, do not track second chargebacks, meaning their net recovery rates are likely much lower than they believe.

Winning chargeback reversals and identifying friendly fraud were reported as the biggest chargeback management challenges facing merchants.

The term “chargeback” is still more popular than “dispute.” The number of respondents using dispute dropped, while the number preferring chargeback increased.

Larger companies were more likely to recognize friendly fraud as a significant concern, but on average, these companies reported little success with chargeback prevention.

Those totally outsourcing their representments saw a net recovery rate over 50 percent higher than those relying solely on in-house teams.

On average, respondents believed friendly fraud was responsible for 42 percent of their chargebacks; statistics show the percentage to be considerably higher.

Card networks are taking action against climbing chargeback rates by introducing new tools for resolving customer disputes before they reach the chargeback stage.

Visa’s new Rapid Dispute Resolution (RDR) has been well-accepted by merchants: 20 percent reported using the product, which was released only a few months prior to the survey.

More merchants are accepting alternative payments. Buy Now, Pay Later programs saw a surge in popularity and are now an option for 27 percent of the merchants.

Demographics & Sample

Annual revenue from card-not-present transactions

<1mil10-100mil1-10mil >100mil23%26%29%22%

Smaller companies (annual revenue of $1m or less) represented the largest share of respondents; companies with revenue of over $100m made up the smallest bloc. The other half of participants fell in between.

While almost all survey respondents reported receiving chargebacks, the number received varied greatly. Slightly over one-third of our sample reported receiving over 75 chargebacks per month. Nearly one-third of respondents reported at least $50 million annually in online revenue, with 11 percent earning at least $500 million annually. Over half claimed $10 million or less annually.

Participating organizations reported average order values that ranged from $100 or less (21 percent) to $500 or more (13 percent), with the majority falling between those extremes.

Over 60 percent of the organizations surveyed have one or more high-risk element. Being in a high-risk industry was effectively tied with subscription billing as the top risk factor. These were followed by affiliate marketing and free trial offers. Many merchants had more than one factor. Just over a third of respondents said that none of the risk factors we suggested applied to them.

What high-risk factors are associated with your business?

18.5%35.8%38.3%22.2%37%Subscription billingHigh-risk industryAffiliate marketingFree trial offersNone of the above

Participants’ Current Representment Solution

NoneSoftware SolutionFully OutsourcedOnly In-House14%11%28%47%

Around a quarter of the merchants did not represent any chargebacks. A similar amount used some sort of third-party solution. Just under half of the merchants reported that they managed disputes in-house.

Besides credit cards, we asked about the payment methods merchants were currently accepting. Alternative payment acceptance was up across the board, with cryptocurrency seeing the largest year-over-year growth. Even so, only 6 percent of merchants report giving customers that option. Meanwhile, both eWallets and ACH transfers are now accepted by over half of merchants.

One of the biggest surprises, however, was the growth in Buy Now, Pay Later programs. While this type of payment method has been available for years, BNPL saw a surge in popularity during the recent COVID-19 crisis. It’s now a payment option for 27 percent of the merchants in our survey.

Besides credit cards, which of the following payment methods do you accept?

Up 50% from 2021Up 6% from 2021Up 29% from 20216%54%27%51%CryptoeWalletsBNPLUp 9% from 2021ACH

The State of Chargebacks

Within your organization, which term is most commonly used?

10%20%30%40%50%20222021ChargebacksBoth evenlyDisputes

Payment card chargebacks are considered necessary to safeguard customers against criminal fraud, merchant abuse, or other issues. They are designed to ensure that customers are not held liable for transactions they did not authorize, or charged for items they did not receive.

Illegitimate payment disputes, either filed by mistake or by cardholders abusing the system, are known as “friendly fraud.” A serious threat to merchants, friendly fraud accounts for the bulk of reported chargeback volume, as can be seen in this report’s more detailed findings.

The representment process gives merchants the right to contest chargebacks by presenting compelling evidence to disprove the customer’s claim. If successful, the chargeback will be reversed. In the event the cardholder disagrees with the decision, however, the issuer may initiate a second-cycle dispute.

In reading this report, it’s important to note that there is some variance in terminology. Starting in 2018, Visa replaced the term “chargeback” with “dispute” for their brand. Acceptance of this change remains slow.

Merchants, especially, continue to use the legacy term when describing an issuer- or customer-initiated bank refund. In fact, the number of respondents using the newer terminology actually dropped considerably since last year’s report.

Obviously, having two terms for the same process can create confusion, especially when stakeholders are inconsistent with their usage. More merchants seem to be reverting to the original terminology, or using the two words interchangeably.

There is a difference, however. A “dispute” (or “customer dispute”) is just what it sounds like: a customer arguing that a charge on their statement is invalid or in some way incorrect.

A “chargeback” is one type of response to that dispute. In almost all situations, filing a chargeback should be considered a last resort. Other responses to a dispute (contacting the merchant for a refund, for example) generally work better for all parties involved.

Merchant Chargeback Rates

What is your biggest challenge related to chargeback management?

5%10%15%20%25%Winning chargeback cases Identifying friendly fraud Reducing overall chargeback rates Balancing chargeback risk against false positives

When asked to identify their three biggest challenges with respect to chargeback management, the two most cited obstacles were identifying friendly fraud and winning chargeback cases; combined, those two factors made up nearly half of the top responses.

The third most cited challenge was reducing overall chargeback rates. Less than 8 percent worried about diagnosing internal issues that cause disputes - an unfortunate statistic, given that errors in merchant policies remain a leading cause of chargebacks.

Perhaps the best indication of the chargeback issue can be found by examining respondents’ chargeback rates (ratios). A chargeback rate is a metric that compares a merchant’s total sales against the number of chargebacks the business received during a given period.

The rate is expressed as a percentage, and each card network establishes a limit for how many chargebacks a merchant can receive before intervention is necessary. This number has historically been pegged to 1 percent of transactions, but the actual threshold is often considerably lower.

What is your current chargeback ratio?

.1%.5%.1%1.5%   0.49%Average.72%More than 500chargebacksper month        .31%Less than 10chargebacks     per month

According to survey results, the average overall chargeback ratio is currently 0.49 percent. This number can be broken down by various criteria illustrating the many factors involved.

For example, for merchants with annual revenue of less than $1 million, the rate dropped to .34 percent. Those with an average ticket value under $20 reported a similar decrease.

The number of chargebacks received played into the calculations, as well; those receiving more than 500 chargebacks monthly saw their ratio jump to .72 percent. Not surprisingly, merchants with fewer than 10 monthly chargebacks had a lower rate, but at .31 percent, it was still higher than expected.

The products or services sold greatly impacted the chargeback rate. Merchants dealing primarily with physical goods had a lower-than-average rate while software sellers reported a higher rate of .67 percent.

High-risk factors naturally caused an increase in reported chargeback rates, too. Being in a high-risk vertical, for example, raised the rate to .61 percent, while offering free trials bumped it even higher. It’s also interesting to note, however, that even retailers with no inherent high-risk triggers still reported a chargeback rate of nearly .4 percent.

Keep in mind that many respondents had more than one of the below factors, which could also impact their chargeback rate.

Chargeback rate breakdown based on various factors

0.38%No-risk factors0.31%Less than 10 chargebacks0.68%Free trial offers0.67%Software0.61%High-risk industry0.44%Physical goods0.72%More than 500 chargebacks

Friendly Fraud Rates are on The Rise

20222021202065%Of merchantsreported anincrease76%54%

When asked if they had observed an increase or a decrease in friendly fraud over the last three years, around a third of respondents didn’t know. Of the remaining merchants, nearly twice as many said friendly fraud instances had increased.

Among merchants who reported an increase, the average jump was around 27 percent. This represents a decline from last year, which makes sense given that the three-year period included the COVID-19 pandemic. Chargeback activity rose to record levels during the crisis, but the number of merchants reporting an increase was expected to decline–or at least remain fairly constant–once the pandemic was brought under control.

We might consider 2021’s numbers a COVIDdriven anomaly. Comparing this year’s survey with figures from 2020, however, we still see a 20 percent jump in the number of respondents saying friendly fraud cases had gone up.

This indicates that COVID’s impact may not be as temporary as many had hoped. Fear and mandatory quarantines played a major role in creating this spike in customer disputes, but other elements continue to grow the problem.

For example, more and more cardholders are becoming aware that the dispute process works in their favor. New payment methods have increased the risk factors for merchants, who must fight fraud from multiple fronts. Compressed time-frames for chargeback processing have put additional pressure on banks, incentivizing the development of a more frictionless process.

Legitimately or otherwise, disputing a transaction is now easier than ever.

So are merchants worried about friendly fraud? Comparing answers over the last three years shows that overall, most merchants have consistently viewed friendly fraud as a concern for their business.

How much of a concern is friendly fraud for your business?

10%    Not aconcern   SmallconcernModerate concernSignificant  concern20%30%40%50%202220212020

Last year saw the highest number of merchants with significant concerns over friendly fraud, which again could be traced to the impact of the pandemic.

The merchants who consider friendly fraud to be a significant threat, however, seem to recognize the ineffectiveness of their management efforts. These answers were significantly influenced by the size of the organization, with larger companies showing the greatest disparity between the perceived threat and their ability to protect themselves against it.

This may not mean friendly fraud is more common for these merchants. It could simply indicate that larger businesses are quicker to recognize the scope of the problem. A larger company could have more resources dedicated to fighting friendly fraud, but that may only highlight their inability to counter it on their own.

Perceived risk of friendly fraud vs. effectiveness of management efforts

10%20%30%40%50%Consider friendly fraud a serious concernSuccessfully mitigating friendly fraudLess than $1MMore than $100M$1M - $100M SHOP

Chargeback Management

Understanding Win Rates VS. Net Recovery Rates

Measuring success means tracking response rate, base win rate, and net recovery rate as distinct KPIs.

Concerns over friendly fraud might be tempered by merchants believing they are winning more representment cases than they are.

Our survey found that, among merchants who challenge illegitimate chargebacks, the average merchant will respond to 49 percent of claims. However, there is a significant discrepancy in how that process is handled.

Even if a merchant responds to a chargeback, there’s no guarantee that they will ultimately recover their funds. The base win rate regularly used for comparison does not accurately reflect the reality of their chargeback situation.


Before we delve into representment statistics, it is crucial to create an apples-to-apples method of calculating results of representment efforts. Measuring success means tracking response rate, base win rate, and net recovery rate as distinct KPIs.

We asked merchants if they challenged invalid chargebacks; an average of 72 percent reported they did.

The survey respondents that do not dispute or represent chargebacks were asked why they did not. Among those who received enough chargebacks to justify contesting (10 or more monthly), the most common responses included a lack of sufficient resources and the belief that they wouldn’t win any of their representments even if they tried.

Does your business contest invalid chargebacks through representment?

10%20%30%40%50%60%70%80%Less than $1MMore than $100M$1M - $100M     72%AverageSHOP

Friendly Fraud

Merchants in the group who did represent were asked to estimate what percentage of their chargebacks came from friendly fraud, with the average figure being 42 percent.

Chargebacks caused by friendly fraud

10%20%30%40%50%Less than $1MMore than $100M$1M - $100M     42%AverageSHOP